Two days ago, the advocacy group Consumer Watchdog filed an anti-trust complaint with the FTC seeking an investigation of Facebook’s allegedly anti-competitive practices. These incude Facebook’s plan to implement new rules for game developers using its platform and Facebook’s deal with the largest social gaming developer, Zynga, Inc.
With a 2012 IPO looming, Facebook has been looking to revise its policies.The new rules prohibit developers from charging lower fees for virtual goods outside Facebook. The social media company would also require developers to exchange with users through Facebook Credits, Facebook’s virtual currency. Third, Facebook would deduct 30 cents of every dollar from payments made through the system. Consumer Watchdog goes so far as to say that Facebook is seeking a monopoly.
But are Facebook’s policies really that evil? Are Americans going to see “Mark Zuckerberg's face replacing George Washington's on the dollar bill. Or rubbing out all the dead presidents on every bit of American currency,” as Consumer Watchdog says? Probably not.
On the first count, Facebook’s new rule seeking what almost amounts to exclusivity might be tight-fisted, but it’s not that bad. It won’t dictate prices in browser-based games, and I doubt it will even dictate prices in social gaming. Even if every game developer used the Facebook platform, there would still be competition among games and developers. Fortunately, that scenario isn’t even realistic; not every developer works through Facebook. Many developers work outside the Realm of Zuckerberg, and the more Marky Z. tries to control his content providers, the more they will begin to move away.
Facebook’s requirement that developers transact with customers using Facebook Credits isn’t a cause for alarm either. Mostly because Microsoft’s XBox Live service already does something similar. XBox Live users spend Microsoft Points (which are bought with “regular” money) on independently developed games, add-ons, backgrounds, and other useless junk. This doesn’t seem to be much different. It may even be a boon to smaller developers, since customers won’t have to enter credit card details every time they want to buy FarmCash.
Consumer Watchdog, however, thinks smaller developers will be unfairly affected by the rule changes, the last of which includes a fee Facebook will collect from every transaction. Under the new scheme, whenever a virtual item is bought in game, Facebook will collect 30 percent of the money. Except the money will actually be Facebook Credits. This seems to be the rule that necessitates the others: using only Facebook Credits to buy things makes it easier for Facebook to take its cut. Smaller developers might be hurt, but costs of entry are still very low and other outlets should compensate for Facebook’s “tax.”
Then you’ve got the big kid on the block -- Zynga, Inc. Zynga, Inc. is the largest social gaming developer. They've bloomed over the last several years, with a huge number of users and hundreds of millions of dollars in revenue. Their most famous game, Farmville, is played by over one hundred million people. And Zynga was a little peeved at the onerous restrictions Facebook was imposing. Reportedly, the two worked out a deal, and Consumer Watchdog sees something suspicious about that. No doubt something nefarious lies behind the collusion of Facebook and a company which deals in pixelated cabbage.
So what about consumers? How will the ignorant masses be injured by this plot? Well, probably not at all. Most people who play social games don’t pay for the extras that companies like Zynga make their money on. In fact, whatever damage is done to consumers will be damage done to Facebook. Internet users and developers reject too much control, and as Facebook clamps down on developers, people will begin to migrate to freer platforms -- FTC intervention unnecessary.